FocusUS, India demand push global urea prices up

LONDON (ICIS news)--Worldwide urea prices have jumped to record highs and were expected to continue to rise on the back of a surge in Indian and US demand, traders said on Friday.

The announcement of Indian Potash Limited’s (IPL) long-awaited tender and US buying on the back of supply concerns, caused global urea prices to surge this week.

There was urea buying in other regions, but the US and India were the key drivers behind the price rises.

India and the US are the two largest importers of urea globally, purchasing around 5.5m and 6m tonnes per annum respectively.

After months of anticipation, this week IPL issued a tender for an unspecified quantity of urea for shipment in July and August.

The tender, for both prilled and granular urea, will close on 19 July, with offers requested to remain valid until 22 July.

Prior to the announcement, IPL bought several cargoes from traders. However, substantial tonnage was still required and it was estimated that IPL would aim to secure another 600-700,000 tonnes of urea under the tender.

This development in India prompted prices in several regions to rise.

In the key benchmark Black Sea market, prilled urea prices rose to a new high of $770/tonne (€485/tonne) FOB (free on board) Yuzhny, up from $740/tonne FOB at the end of last week.

"Traders are taking positions," said a trader."Because of India, there is a run for the tonnes in Yuzhny."

As a result, Black Sea sellers were in bullish mood. For example, trader/distributor Agrofertrans (AFT) was yet to sell any of its August tonnes and was targeting $800/tonne FOB Yuzhny.

The strength of the US market was also contributing towards firming international prices.